Federal court orders Texas resident to pay $2.6M in fraud case

Case alleges defendant promised 20% monthly returns

The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court order against defendants Christopher D. Daley and his firm, TC Credit Service, LLC doing business as Del-Mair Group, LLC (DMG), both of Houston, Texas, requiring Daley and DMG to jointly pay $654,183 in restitution to defrauded investors and a civil monetary penalty of $1,995,000. The order also imposes permanent trading and registration bans against the defendants and prohibits them from violating the anti-fraud provisions of the Commodity Exchange Act and CFTC regulations, as charged.

The order of default judgment, entered by Judge Keith P. Ellison of the U.S. District Court for the Southern District of Texas, stems from a CFTC enforcement action filed on June 18, 2012, against Daley and DMG, charging them with solicitation fraud and misappropriation in the operation of a commodity pool scheme (see CFTC Press Release 6301-12, July 11, 2012, as a Related Link). Daley was owner and sole employee of DMG, and neither defendant has ever been registered with the CFTC.

The order finds that Daley fraudulently solicited and accepted over $1.4 million from customers to participate in a commodity pool to trade crude oil futures contracts. In soliciting customers, Daley represented that DMG would generate monthly returns of 20 percent and distributed account opening documents that guaranteed 20 percent to 60 percent monthly returns on deposits, the order finds, noting that these representations were false. In reality, Daley’s trading accounts sustained net losses each month. The order also finds that the defendants misappropriated customers’ funds by using those funds to pay other customers’ purported returns, to pay for Daley’s personal expenses, and to trade in Daley’s personal commodity interest accounts. The defendants distributed false account statements to pool participants reporting returns supposedly earned as a result of Daley’s futures trading and acted in capacities requiring registration with the CFTC, the order finds.